Table of Contents
Issues in the Market
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- Key issues
- Abbreviations
Future Opportunities
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- Decline of deference
- Cool vending
Market in Brief
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- Consumer attitudes towards retail banking
- A market built on cross-sales
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- Figure 1: Product holdings and cross-sales, August 2010
- Four fifths own at least one additional product with their current account provider
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- Figure 2: Number of financial products or services arranged with main current account provider, August 2010
- Inertia remains high…
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- Figure 3: Switching intentions, August 2010
- …because customer satisfaction is also high
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- Figure 4: Customer satisfaction, August 2010
- Cynicism in the retail banking market
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- Figure 5: Attitudes towards banks and building societies, August 2010
- The prospects for new entrants
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- Figure 6: Key current account features, August 2010
- Credit crisis – a force for change?
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- Figure 7: Proportion of consumers who are more or less likely to switch retail banking provider as compared to three years ago, July 2010
- Rates, or local service?
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- Figure 8: Retail banking consumer segmentation, August 2010
- Market conditions
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- Figure 9: Unsecured lending, 2000-10
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- Figure 10: Secured lending, 2000-10
Economic Environment
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- Key points
- The recovery continues…
- …but there are challenges to be faced
- The impact of the economy on the banking industry
- Insolvencies up – but they haven’t soared
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- Figure 11: Individual insolvencies in England and Wales (not seasonally adjusted), by type, Q1 2000-Q3 2010
- Loan write-offs spike in Q2 2010
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- Figure 12: Write-offs of loans by banks and building societies, 2005-10
Technological Developments
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- Key points
- The internet is undermining the primacy of the bank branch…
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- Figure 13: Primary source of information for arranging a financial services product, August 2010
- …and becoming the main means of interaction
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- Figure 14: Preferred channel for banking services, May 2010
- Still a sizeable pool of consumers who wouldn’t buy online
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- Figure 15: Types of financial services products arranged online, May 2010
- Mobile banking still a step too far for most
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- Figure 16: Financial transactions performed using a mobile phone, May 2010
- Barclays leads the way with contactless payment technology…
- …and it will be banks and retailers that drive adoption, not consumers
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- Figure 17: Statements on touch-and-go technology in credit/debit cards, May 2010
- The danger of negative reactions
Consumer Context
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- Key points
- Confidence remains weak…
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- Figure 18: Consumer confidence, 2005-10
- …and this is reflected in expected financial activity
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- Figure 19: Savings, investment, borrowing and debt repayment – consumers’ expected activity, 2002-10
- Marketing needs to reflect the new mood
- Borrowing intentions – coping, rather than planning
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- Figure 20: Consumer credit – consumers’ expected activity, 2002-10
- The transformation of the mortgage market
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- Figure 21: Mortgage and home buying – consumers’ expected activity, 2002-10
The Interest Rate Effect
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- Key points
- Fundamental shift in the interest rate environment…
- …with a major impact on retail banking markets
- Mortgages
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- Figure 22: Average quoted household mortgage rates, 2005-10
- Consumer credit
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- Figure 23: Average quoted consumer credit rates, 2005-10
- Savings and investments
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- Figure 24: Average quoted instant-access savings and ISA rates, 2005-10
Segment Performance
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- Key points
- Current and deposit accounts
- Little scope for growth in account numbers...
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- Figure 25: Number of current account holders and number of current accounts, 2007-09
- …but still room to grow the fee-based market
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- Figure 26: Ownership of fee-based packaged and free/ordinary current accounts, March 2010
- Retail deposits show little growth…
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- Figure 27: Outstanding retail savings balances*, 2005-10
- …but the ISA market is showing growth
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- Figure 28: Number of ISAs and amounts subscribed, segmented by type, 1999/2000-2009/10
- Secured and unsecured credit
- Appetite for unsecured credit falls post-recession…
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- Figure 29: Unsecured lending, 2000-10
- …and new mortgage lending plummets
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- Figure 30: Secured lending, 2000-10
- Insurance
- Motor and home insurance weather the recession well
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- Figure 31: Domestic motor and home insurance premiums, 2004-09
- The search for new product lines
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- Figure 32: New guaranteed acceptance plan and other non-linked whole-of-life premiums, by channel, 2006-09
Key Providers
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- Key points
- Is there a difference between ‘your current account provider’…
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- Figure 33: Main current account provider, August 2010
- …and ‘your bank’?
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- Figure 34: Main financial services provider, 2009 and 2010
New Entrants
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- Key points
- Virgin and Tesco are the most likely contenders
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- Figure 35: Awareness of potential new entrants and willingness to switch to them (selected brands only), March 2010
- Learning from previous challenges to the big brands
- What would success look like for a new entrant?
- The banking crisis – an opportunity for new entrants…
- …but has it led to a safety-first approach?
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- Figure 36: Proportion of consumers who are more or less likely to switch retail banking provider as compared to three years ago, July 2010
- People need new entrants to prove their credentials
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- Figure 37: Willingness to consider using a retail banking provider who has only started offering the product in the last six months, July 2010
- Large majority wouldn’t consider a direct-only current account
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- Figure 38: Proportion of current account customers who would consider using a direct-only provider, July 2010
- The cost of free banking
Product Ownership and Cross-Sales
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- Key points
- Savings products most cross-sold: motor insurance the least
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- Figure 39: Product holdings and cross-sales, August 2010
- Cross-sales the rule, not the exception
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- Figure 40: Number of financial products or services arranged with main current account provider, August 2010
- General insurance – a major opportunity in a difficult climate
- Little difference in banks’ ability to cross-sell
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- Figure 41: Repertoire of financial products or services arranged with main current account provider, by most popular main current account providers, August 2010
- Loyalty among the older generation?
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- Figure 42: Repertoire of financial products or services arranged with main current account provider and with other providers, by age, August 2010
Switching and Satisfaction
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- Key points
- Few are thinking of switching…
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- Figure 43: Switching intentions and customer satisfaction, August 2010
- …because most are pleased with what they’ve already got
- The First Direct effect
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- Figure 44: Main current account provider, by attitudes towards banks and building societies, August 2010
- Paying attention to the key customers
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- Figure 45: Repertoire of financial products or services arranged with main current account provider, by attitudes towards banks and building societies, August 2010
- The mobile affluent
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- Figure 46: Switching intentions and customer satisfaction, by demographics, August 2010
Trust and Differentiation
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- Key points
- Are banks all the same?
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- Figure 47: Attitudes towards banks and building societies, August 2010
- Small isn’t always beautiful
- Losing touch with their customers
- Different expectations from a different era in banking
- Concentrating on safety
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- Figure 48: Agreement with the statement ‘Big banks are the safest place for your money’, by product cross-holdings, August 2010
Loyalty in Retail Banking
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- Key points
- Is loyalty a one-way deal?
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- Figure 49: Attitudes towards buying financial products, August 2010
- The benefits of not shopping around
- New entrants will undermine inertia
- The difference between ‘banks’ and ‘my bank’
- Key customers recognise the advantage of loyalty
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- Figure 50: Repertoire of financial products or services arranged with main current account provider, by attitudes towards buying financial products, August 2010
- The voice of experience?
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- Figure 51: Attitudes towards buying financial products, by demographics, August 2010
Provider Choice
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- Key points
- Branches are crucial, even in an online world
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- Figure 52: Key current account features, August 2010
- Penalty charges and overdraft rates – the triumph of optimism over experience?
- Young and the old are keeping to the high street
- An ability to take control of a problem
Segmenting the Market
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- Key points
- All about the rate, or looking to build relationships?
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- Figure 53: Retail banking consumer segmentation, August 2010
- All about the rate
- Keep it local
- Relationship-builder
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- Figure 54: Key current account features, by target groups, August 2010
- The benefits of getting to know your customers
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- Figure 55: Agreement with selected statements regarding banks and building societies, by target groups, August 2010
- The London challenge
- Tailoring the offering in a time of demographic change…
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- Figure 56: Target groups, by age, August 2010
- …and bringing business back to the main current account provider?
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- Figure 57: Attitudes towards buying financial products, by target groups, August 2010
- Even those looking for traditional service are moving online
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- Figure 58: First place to look for information when arranging a financial services product, by target groups, August 2010
Appendix – Key Providers
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- Figure 59: Most popular current account provider, by demographics, August 2010
- Figure 60: Next most popular current account provider, by demographics, August 2010
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Appendix – Product Ownership and Cross-Sales
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- Figure 61: Repertoire of financial products or services arranged with main current account provider, by most popular main current account provider, August 2010
- Figure 62: Repertoire of financial products or services arranged with main current account provider, by next most popular main current account provider, August 2010
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- Figure 63: Product holdings, by repertoire of financial products or services arranged with main current account provider, August 2010
- Figure 64: Most popular product holdings own/arranged with current account provider, by demographics, August 2010
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- Figure 65: Next most popular product holdings own/arranged with current account provider, by demographics, August 2010
- Figure 66: Most popular product holdings own/arranged with another provider, by demographics, August 2010
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- Figure 67: Next most popular product holdings own/arranged with another provider, by demographics, August 2010
- Figure 68: Most popular don’t own product holdings, by demographics, August 2010
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- Figure 69: Next most popular don’t own product holdings, by demographics, August 2010
- Figure 70: Repertoire of financial products or services arranged with main current account provider, by demographics, August 2010
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- Figure 71: Repertoire of financial products or services arranged with firms other than main current account provider, by demographics, August 2010
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Appendix – Switching and Satisfaction
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- Figure 72: Switching intentions and customer satisfaction, by demographics, August 2010
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Appendix – Trust and Differentiation
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- Figure 73: Most common attitudes towards banks and building societies, by demographics, August 2010
- Figure 74: Next most common attitudes towards banks and building societies, by demographics, August 2010
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- Figure 75: Repertoire of financial products or services arranged with main current account provider, by attitudes towards banks and building societies, August 2010
- Figure 76: Repertoire of financial products or services arranged with main current account provider, by attitudes towards banks and building societies, August 2010
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- Figure 77: Main current account provider, by attitudes towards banks and building societies, August 2010
- Figure 78: Main current account provider, by attitudes towards banks and building societies, August 2010
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Appendix – Loyalty in Retail Banking
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- Figure 79: Attitudes towards buying financial products, by demographics, August 2010
- Figure 80: Main current account provider, by attitudes towards buying financial products, August 2010
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Appendix – Provider Choice
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- Figure 81: Most popular key current account features, by demographics, August 2010
- Figure 82: Next most popular key current account features, by demographics, August 2010
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- Figure 83: Key current account features, by most popular main current account provider, August 2010
- Figure 84: Key current account features, by next most popular main current account provider, August 2010
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Appendix – Segmenting the Market
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- Figure 85: Target groups, by most popular main current account provider, August 2010
- Figure 86: Target groups, by most popular main current account provider, August 2010
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- Figure 87: Product holdings, by target groups, August 2010
- Figure 88: Target groups, by demographics, August 2010
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